Employment Insurance – Important Changes That May Affect Your Employees

The Canadian federal government has reduced the waiting period for employment insurance (EI) benefits. Effective January 1st, 2017, the mandatory waiting period before EI benefits become payable was reduced from two weeks to one week. This also means that the EI payment period is reduced from 17 weeks down to 16 weeks, however the 15 week period of paid benefits remains unchanged.

What does this mean for employers?

As a plan sponsor of a Short Term Disability (STD) plan qualified under an EI Supplementary Unemployment Benefit Plan (SUB) or an EI Premium Reduction Program (PRP), you will have four (4) years to make the requisite adjustments so that your existing plan can comply with these new changes. The four year “transitional period” will cease on January 3rd, 2021.

What is a Supplemental Unemployment Benefit Program (SUB)?

Service Canada states that the purpose of a Supplemental Unemployment Benefit Program, or SUB, is to “provide supplemental payments to Employment Insurance benefits during a period of unemployment due to temporary stoppage of work, training, illness, injury or quarantine.”1 It is up to the employer to choose which of these types of unemployment to supplement.

How does an EI Premium Reduction Program (PRP) work?

As an employer, if you provide your employees with a short-term disability plan, and the plan meets certain requirements, your company may qualify for lower EI premium rates below the standard employer rate of 1.4 times the employees’ EI premiums.2 Click here to see the list of basic requirements that must be met.

How do these EI changes affect SUBs and PRPs?

Plan sponsors of SUBs may need to make adjustments to their waiting periods, as well as their overall benefit periods, as the waiting period has been reduced to one week, and thus EI payments will start one week earlier. This may result in a premium reduction from your insurer.

The same goes for plan sponsors with PRP plans that currently have waiting periods greater than seven (7) days – these waiting periods will need to be reduced to seven (7) days or less in order to still qualify for reduced EI premium rates, which may result in an increase in premiums charged by your insurer.

All new PRP and SUB plans that take effect on or after January 1st, 2017 must comply with the new seven (7) day waiting period, while plans in-force prior to January 1st, 2017 will have until January 3rd, 2021 to comply.

Still have questions?

Our employee group benefits experts are here to help! Call Hull Clearwater Pension & Benefits today for a consultation on your employee benefits, and to learn more about these important EI changes – (416) 865-0131.

  1. Supplemental Unemployment Benefit Program. (2015, February 02). Retrieved November 26, 2016, from http://www.servicecanada.gc.ca/eng/cs/sub/0200/0200_010.shtml
  2. EI Premium Reduction Program – For employers. (2016, November 08). Retrieved November 25, 2016, from http://www.esdc.gc.ca/en/ei/employers_premium_reduction_program.page

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